Reserve Bank Managed Funds statistics for the June quarter show that KiwiSaver is becoming increasingly important as a savings vehicle.
At the end of June total managed funds were $67.4 billion with KiwiSaver representing $9.4 billion or 14 per cent of this. Thus in the past four years the managed funds statistics figures have changed as following;
– KiwiSaver has gone from zero to $9.4 billion
– Non-KiwiSaver managed funds have declined from $65.9 billion to $58.0 billion
Thus there has been a shift from traditional superannuation funds to KiwiSaver over the past four years although poor sharemarket performances have also influenced the overall figures.
KiwiSaver money has been mainly invested in cash, domestic fixed interest or offshore.
KiwiSaver allocation as at June 2011
|
Domestic cash |
10.7% |
|
Domestic fixed interest |
29.1% |
|
Domestic equities |
9.6% |
|
Domestic property |
2.6% |
|
Domestic loans & placements |
0.0% |
|
Domestic other |
– |
|
Offshore investments |
48.0% |
|
|
100% |
This approach is far too conservative from both the investors and New Zealand’s perspective. For example Australian’s have 42.5 per cent of their superannuation funds in domestic equities and only 14.5 per cent offshore.
KiwiSaver investors should allocate more funds to risk assets – hopefully domestic equities – as they become aware that these investments should deliver a higher return over the longer term.
Brian Gaynor